All Forum Posts by: Marco Anemone

@Elvia Morales, converting the storage space into a bedroom makes sense. This more than likely the route to go as it should increase property value and increase rental amount. You may want to look at housing choice voucher program (section 8)- You might be able to get a bit more for rent.

@Elvia Morales, is your intention to flip it or rent it? How many bedrooms? Is it in 60440 or 60490? Rental numbers may be a little tight in the short term but over time your rent will increase while your loan principal and interest payments remain the same (assuming your loan is fixed rate for the entire term). Regrettably taxes and insurance are still likely to increase.

@John Underwood

Comment: "Must be nice"...

Response: "Oh it is. It really is" 😏

This is what I meant above when I listed the 3 reasons why most investors won't reach CF/Income replacement level, and the things they could/should know/do that would allow them to reach it. Its starts with REI focusing on CF as if it's a stand alone solution...it's not. Neither is focusing on equity alone. The two of them together is better but they are means to an end, not the end.

Unfortunately, too many REI don't understand what cost is. They introduce interest rates, ROI in percentages (telling them nothing of value), and equity build up...but within the same property instead of total equity. $100k in equity in one property is equal to $100k in equity spread out evenly in 5 properties. The difference is what the true value is in both cases.

Similarly, CF as a percentage of $$$ invested, or a total CF in a property also tells us nothing of value. Why? First think about why we want CF...to replace our monthly income...to cover our monthly bills. $200, $400, $600 per month are just numbers without any context within our overall plan...to achieve a replacement source for out income. Same, even worse, is when we use percentages as our judge of a good deal. Cash flow should first pay us back for the cash we put into the deal the CF comes from. Number one judge of a good deal should be how long it takes to recover that cash in. If a deal that makes $6000/yr costs $60k in DP, that means it takes 10 years to recover the DP. If a $5k CF/yr on a $20k DP only takes 4 years to recover it, which deal is better?

I've read on this forum how there are REI that love deals that cost them $90k in cash (DP, CC, rehab, etc..., and make $3k/month as a good deal. How is that possible if it takes 30 years to recover their cash?

@Joe Villeneuve, in an earlier post you mentioned something along the lines of "hos is it a good deal to invest $90k and get 3k a month. It'll take 30 years to get back your money" I think you meant 30 months - 2.5 years.

Sorry, I can't seem to quote your post from my phone.

@Jill F., I haven't implemented the use of property management software yet, but it's long overdue. I'll be sure to add buildium to my review list.

@Logan Cheek, I appreciate the suggestion, and I agree with your points. My reason for looking into hiring a person with management skills/experience versus handing over to a management company is that the customary method of compensation may not fit very well in my scenario, primarily because my rental rates tend to be well above market averages which will result in a higher dollar amount going to management expenses than would otherwise be the case. For instance, house A: market average for typical 1200 sf 4 bedroom single family house rents for $1,800. 10% management fee = $180. Comparable house B rents for $2,350. 10% management fee = $235. Theoretically the same amount of management resources will be needed for both properties but it's much more expensive to hire a property management company for house B. I don't disagree that it's a tough job, and ultimately I may end up going the property management route. Just exploring options.

I currently own and self manage 16 single family rentals, and while it hasn't been to difficult or time consuming, I intend to continue to grow my portfolio and can see a need to hand of many of the tasks I currently oversee. I'm considering turning over the portfolio to a property management firm, but when factoring the commonly used 10% of rental rate they charge, I may be better off hiring a property manager (perhaps on a part time basis at first, if not full time). Any advice, thoughts or experiences that you can share would be greatly appreciated.

@Alex Forest, rates definitely existed. In the past 4 months my wife and I refinanced 7 SFH at 3% 30 year term, 1 at 3.675% (cash out) 30 year term and purchased 2 at 3%,30 year term. In the process of purchasing/closing on 2 more, 1 at 3% and 1 at 3.375%.

​@Sean Gimpert, congrats on your purchase!

I can't speak to how HUD goes about it, but if you are asking how the rent is calculated for a section 8 voucher holder, I can provide some insight. The amount listed on the payment standards pd. is the max amount they will pay, but the house has to be inspect and qualified. That is, there needs to be other comparable houses (3 or more) that rent for that amount and the comparables must be within approximately 300 sf. in size to the subject property. That said, if the subject property (the house you are renting) is of higher quality finishes, amenities, etc., and the housing inspector can justify it, it may be approved for a higher rent amount than comps. After that has been established, the utility (gas, water, electricity, etc) allowance comes into play. A pdf. Containing info on these amounts can be found on the Housing Authority Of Joliet website. If the tenant is to pay for some or all of the utilities, and the voucher holder/tenant does not have an income, then the amount gets deducted from the approved rental amount.

Then there is one more thing, and I'm not 100% clear if this is the way it works, so please don't take it as gospel. It's just a general idea of how I understand it to work.

If they do have income then a certain percentage of the income (I believe no more than 30%) is calculated and that amount is the responsibility of the tenant to pay towards rent. Part of their income can also go towards offsetting some or all of the utilities allowance. I also think that, depending on how much they make, the tenant is allowed to pay more than the max approved rent amount- but must be approved by housing authority. IE., If you want $2200 for rent but it is approved for $2000 less utilities allowance of $296, the total rent to landlord is $1904. If tenant has sufficient income, some of it can go towards offsetting utilities allowances and possibly towards additional rent, increasing the total rent to landlord.